21. The Great Idea of Alfred Cowles III

With his interest in statistics stimulated and the time afforded with a life of semi-retirement, Cowles became interested in applying statistical principles to a finance discipline for which he had developed a professional suspicion that it lacked scientific rigor. He had become growingly suspicious of the spurious advice offered by many financial advisors over the Roaring Twenties, especially in the wake of the Great Crash of 1929, and he had schooled himself on the mathematics of least squares and statistics that could act as the basis for the treatment of finance as a science rather than an art. His first project in finance was to determine the effectiveness and correlation of the advice from 24 market newsletters and stock market performance.